Answertechnical question one andapplication question one on pp. 257-259 of Farnham textbook, 3rd edition.

Technical question # 1:

The following graph shows a firm in a monopolistic industry.

a. If the firm aims at maximizing profit, what will be the quantity produced by the firm and the price it charges?

b. If the firm aims at maximizing revenue, what will be the quantity produced by the firm and the price it charges?

Application question # 1:

Drawing on current business publications, discuss what has happened to Eastman Kodak Co. since the time this case was written. Has the company been able to develop strategies to regain market power?

**Changing Market Power for Eastman Kodak Co**

Eastman Kodak Co., one of the most well-known and oncesuccessful companies in the United States, filed for bankruptcy in January 2012.1 This was a substantial change in direction for a company that once dominated its industry and had a near-monopoly on camera film, which earned it profits that it paid out to workers on "wage dividend days." The company invented the digital camera in 1975, but then did not develop the new technology. In the film market, Kodak lost market share to foreign companies in the 1980s and stopped making investments in film in 2003.2 Discussion of a possible Kodak bankruptcy appeared in the media in fall 2011.3 After considering chemicals, bathroom cleaners, and medical testing devices in the 1980s and 1990s, the company struggled to rebuild its operations around commercial and consumer printing to offset the decline in film and photography gear sales. In August 2011, it began attempting to sell its portfolio of 1,100 digital patents to increase its cash position. Many potential buyers, however, were uncertain about buying patents from a company that might face bankruptcy. Kodak also sued companies such as Apple Inc. and HTC Corp. for patent infringement, alleging that these companies violated Kodak patents regarding the transmission of photos from mobile phones and tablets and image previewing by digital cameras. Kodak announced that it raised $3 billion between 2003 and 2010 from suits for patent infringement and licensing deals that settled these cases. However, the company alleged that Apple and HTC Corp. took advantage of its weakened financial condition to drag out litigation over the patent violations. A large burden of retiree benefits, the weak economy since 2008, and moves by vendors to cut relationships with the company also contributed to the bankruptcy filing. In early 2012 it was not clear whether the company would be able to emerge from bankruptcy in better financial condition and ready to survive in the consumer and commercial inkjet printing market dominated by rivals such as HewlettPackard Co. Kodak had to subsidize sales to build the market for its ink, and its workforce decreased from 64,000 in 2003 to 17,000 in 2011. In February 2012, the company announced that it would stop production of digital cameras, pocket video cameras, and digital picture frames, instead licensing its brand to other manufacturers.4 This strategy removed the company from the camera business, which it had pursued since George Eastman introduced the first Kodak camera in 1888. The company's U.S. market share in digital cameras decreased from 16.6 percent in 2008 to 11.6 percent in 2011. The company had sustained the digital camera business because it helped win shelf space for its consumer inkjet printers. However, by early 2012 Kodak's goal was to build its consumer business around online and retail-based photo kiosks, desktop inkjet printing, and camera accessories and batteries